The US housing industry is entering 2025 with a mix of challenges and opportunities. Recent market movements indicate a slight pickup in housing activity despite elevated mortgage rates. According to Freddie Mac, the 30-year fixed-rate mortgage ended December at 6.85%, and while rates are expected to remain higher than anticipated, they are projected to decline modestly throughout the year[3].

Home prices continued to rise, with a 4.7% increase in November 2024, and forecasts predict a 3.0% average increase for 2025[1]. However, the pace of house price appreciation is expected to moderate from the levels seen in 2024. CoreLogic predicts that home-price appreciation will slow to an average growth of 2% for 2025, compared to 4.5% growth in 2024[4].

Inventory levels remain a concern, with a decrease in November 2024, likely due to a 6% increase in year-over-year sales in November. However, the National Association of Home Builders' Housing Market Index indicates that builders are hopeful for an improvement in the regulatory environment for building, which could lead to increased inventory[3].

Consumer behavior is shifting, with more buyers entering the market as the economy continues to add jobs and housing inventory grows compared to a year ago. Lawrence Yun, Chief Economist of the National Association of Realtors, notes that "home sales momentum is building" as consumers get used to a new normal of mortgage rates between 6% and 7%[4].

Industry leaders are responding to current challenges by focusing on new construction to increase inventory. Greg McBride, Chief Financial Analyst for Bankrate, states that "mortgage rates won't fall enough to spur an increase in existing-home inventory, with most of the increase in inventory seen in the market coming from new construction"[4].

In comparison to previous reporting, the housing market in 2025 is expected to be more favorable than much of 2024, with a positive but moderate pace of growth. However, uncertainty remains, with rising prices and slowing construction potentially causing trouble for buyers.

Key statistics and data from the past week include:

- 30-year fixed-rate mortgage at 6.85% in December[3]
- Home prices increased by 4.7% in November 2024[1]
- Forecasts predict a 3.0% average increase in home prices for 2025[1]
- CoreLogic predicts a 2% average growth in home prices for 2025[4]
- National Association of Home Builders' Housing Market Index indicates a steady but weak confidence among builders[3]

Overall, the US housing industry is navigating a complex landscape of challenges and opportunities. While elevated mortgage rates and inventory concerns persist, shifts in consumer behavior and a focus on new construction offer a promising outlook for 2025.

This content was created in partnership and with the help of Artificial Intelligence AI